CHAPTER- ONE

INTRODUCTION

1.1 Background of the Study

In ancient Vedic Era, there was crude form of banking because deposits, pledges,
politics of loan and interest can be traced from Manu Smriti. In 15 th and 16th century,
Roman emperor collapsed, as a result, revival of commercial and trading in European
countries. Similarly, following communities or groups also revived commercial
banking transactions. Such as the merchant traders, goldsmith, and the money
lenders.Therefore, in accordance with the opinion of great economist, G. Growther,
these three groups are the ancestors of bankers. Whereas in the connection to
traceable origin and development of banking institution in the world, “The bank of
Venice” of Italy was established in 1157 A.D. as the first banking institution in the
world the second banking institution namely, “The Bank of Barcelona” of Spain was
established in 1401 A.D. After that, “The Bank of England” was incorporated in 1964
A.D. as the first Joint Stock Bank and later on it become the first central bank in the
world in 1884 A.D.

The term of bank can be understood as an institution that deals with money and credit.
It is an intermediate financial institution, which will collect money from the public or
institutions and in turn advances loan to any person or institutions that need by
creating credit.

The first meaning of bank has been derived from the Italian word ‘Banko’ which
refers to accumulation of money or stock (share). In the Italian Business Houses,
banking was called “Banchi”. Similarly the word Banchi has also been derived from
the German word Banch that signifies mount. Hence the meaning of bank has been
firstly derived from “banco” and secondly from German word “Banch”.
A bank is a financial institution engaged in the monetary transactions. It receives
deposits and lends to those who need money for some purpose paying and charging
interest at some fixed rate percentage per annum. Bank also provides agency services

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such as remitting and collecting cash on behalf of the customers, opening bank drafts
and letter of credit facilities, underwriting shares of newly establish companies and
many more.

Banking is a business of providing financial services to customers and business. It

helps in every sectors of economy such as trade industry and commerce. It is an
important aid to business. Banks provide finance to which is the foundation of every
business activity.

1.2 Introduction to Himalayan Bank Limited

c was established in 1993 in joint venture with Habib Bank Limited of Pakistan.
Despite the cut-throat competition in the Nepalese Banking sector, Himalayan Bank
has been able to maintain a lead in the primary banking activities- Loans and
Deposits.
Legacy of Himalayan lives on in an institution that's known throughout Nepal for its
innovative approaches to merchandising and customer service. Products such as
Premium Savings Account, HBL Proprietary Card and Millionaire Deposit Scheme
besides services such as ATMs and Tele-banking were first introduced by HBL. Other
financial institutions in the country have been following our lead by introducing
similar products and services. Therefore, we stand for the innovations that we bring
about in this country to help our Customers besides modernizing the banking sector.
With the highest deposit base and loan portfolio amongst private sector banks and
extending guarantees to correspondent banks covering exposure of other local banks
under our credit standing with foreign correspondent banks, we believe we obviously
lead the banking sector of Nepal. The most recent rating of HBL by Bankers’
Almanac as country’s number 1 Bank easily confirms our claim.
All Branches of HBL Bank are integrated into Globus (developed by Temenos), the
single Banking software where the Bank has made substantial investments. This has
helped the Bank provide services like ‘Any Branch Banking Facility’, Internet
Banking and SMS Banking. Living up to the expectations and aspirations of the
Customers and other stakeholders of being innovative, HBL very recently introduced
several new products and services. Millionaire Deposit Scheme, Small Business

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Enterprises Loan, Pre-paid Visa Card, International Travel Quota Credit Card,
Consumer Finance through Credit Card and online TOEFL, SAT, IELTS, etc. fee
payment facility are some of the products and services. HBL also has a dedicated
offsite ‘Disaster Recovery Management System’. Looking at the number of Nepalese
workers abroad and their need for formal money transfer channel; HBL has developed
exclusive and proprietary online money transfer software- Himalremit. By deputing
our own staff with technical tie-ups with local exchange houses and banks, in the
Middle East and Gulf region, HBL is the biggest inward remittance handling Bank in
Nepal. All this only reflects that HBL has an outside-in rather than inside-out
approach where Customers’ needs and wants stand first.
Himalayan bank was established in 1992 with a joint venture with Habib Bank
Limited-Pakistan. This is one of the popular and well established banks of Pakistan.
The bank at present has five branches in Kathmandu valley, namely Thamel, New
Road, Maharagunj, Pulchwok and Nagarkot. Beside three branches outside
Kathmandu in Birgunj, Bharatpur and Tandi, The bank is also operating a counter in
the premise of the Royal Palace. The bank has a very aggressive plan of established
more branches in different parts of the kingdom in the future. Over last 10 years, it
has no doubt experienced a dynamic growth, earning hand some profit. It has
expanded its branch to increase the volume of its transaction.

1.2.1 Functions of Himalayan Bank

 Corresponding network: - Himalayan Bank has access to the world wide

correspondent network of Habib Banks for funds transfer letter of credit or any
banking business anywhere in the world. Habib bank is the largest and oldest
bank in Pakistan. Content over 1800 corresponding worldwide, beside HB has
correspondent arrangement with 178 renowned banks like American, express
bank, Citibank and ABN amro. The extended list of the correspondent bank
could be accessed in the bank’s wed page.
 ATM: - The automatic teller machine established in the premises of their new
road branch has enabled them to extend service for 24 hours. To avail of this
facility, the customer most requested on ATM card from any of their branches.
Thanks to any branch. Banking Services the withdrawal can be made from any
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 account in any of their branches. Plans are underway to install more ATM
machines and provide more services from all their branches.
 Credit Card: - HBL Bank Limited has been a pillar in introducing a Nepalese
domestic credit card “Himalayan Bank credit card valid in Nepal. Encouraged
by the demand for our credit card, the bank has also introduced” Himalayan
bank gold card with additional privileges Himalayan is also a member of visa
and master card internationally. The bank issues all ranges of VISA card and
has a plan of issuing master card.
 Tele Banking: - To provide more prompt and efficient services to its
customers. Himalayan Bank has been following in instituting telebanking
service.
The Vision of HBL
Himalayan Bank Limited holds of a vision to become a Leading Bank of the
country by providing premium products and services to the customers, thus ensuring
attractive and substantial returns to the stakeholders of the Bank.
Mission
The Bank’s mission is to become preferred provider of quality financial services in
the country. There are two components in the mission of the Bank; Preferred
Provider and Quality Financial Services; therefore we at HBL believe that the
mission will be accomplished only by satisfying these two important components with
the Customer at focus. The Bank always strives positioning itself in the hearts and
minds of the customers.
1.3 Statement of the Problems
The need of deposit mobilization for economic development of a country is no more
to question. But we are facing an acute problem of resources mobilization. We have
31 commercial banks in Nepal which are very much considered to be vital financial
institutions to mobilize domestic resources. Under the prevalence if these situations
the study has try to deal with following problems.
 What is the relationship between deposit and loans and advances?
 What is the increasing or decreasing trend of deposit mobilization of
commercial banks?
1.4 Objectives of Study

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HBL Bank Ltd. becomes the focal point of this present study so the specific objective
of this study so the specific objective of this study is to see its performance in the
course of deposit distribution. Following subsidiary ob`jectives have been formed to
assist the basic objectives:-
 To analyze the relationship between deposit and loans and advance
 To analyze the trend of deposit mobilization of sample banks

1.5 Significance of the Study

Banks and other financial institutions play important role to increase economic
standard for the development of the country. Economic development becomes slow if
there are incomplete and unfair banking facilities. Especially commercial banks
provide different economic and technical facilities to the people who involve in
business activities. Commercial banks plays major role in collection of scared small
savings form depositors and transfer these funds into productive sectors for the
economic development.
As the research done in any field there are several key factors that cannot be avoided,
in which significance of study also occurs. Mainly this study covers the deposit and
credit position of commercial banks, so it helps to reveal the financial position of
banks and study, so it helps to reveal the financial position of banks and study
occupies an important role in the series of the studies on commercial banks. The
significance of the study are:
 Important to know how well the banks in utilizing its deposits.
 Important to the management party of selected banks for the evaluation of the
performance of their banks.
 This study has been equally important to the others who are interested to know
about the area. It may encourage to researcher to research further.

1.6 Literature review

Literature review is a process of collecting, summarizing, analyzing and evaluating

necessary data in a particular period where the necessary ones is selected and the
unnecessary ones are screened. A literature review is a body of text that aims to

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review the critical points of current knowledge including substantive findings as well
as theoretical and methodological contributions to a particular topic. Literature
reviews are secondary sources, and as such, do not report any new or original
experimental work. Also, a literature review can be interpreted. Nabil Bank Limited
is the first foreign joint venture bank in Nepal. It is one of the prominent commercial
banks of Nepal. It is committed and building strong relationship between bank and
larger community. Ratio Analysis shows the financial position of the organizations of
the whole year. It shows the growth in the company. The financial analysis shows
loan, deposits, overdraft, balance sheet of the fiscal year and shows increase decrease
in the financial position of the bank. Like all businesses, banks make profit by
earning more money than what they pay in expenses. The major portion of a bank’s
profit comes from the fees that it charges for its services and the interest that it earns
on its assets (loans). Its major expense is the interest paid on its liabilities (deposits).
The major assets of a bank are its loans to individuals, businesses and other
organizations and the securities that it holds, while its major liabilities are its deposits
and the money that it borrows either from other banks or by selling commercial paper
in the money market. Ratio Analysis is the crucial factor for the existence for the
existence of the bank in the market for the long run because profit is the measuring
rod of the bank’s long term sustainability and the survival. Only by being profitable, a
bank can compete efficiently in the market to generate value and the return to the
investors.

1.6.1 Conceptual/Theoretical Review

Deposit mobilization of the process of selecting a bundle of securities that provides
the investing organization a maximum yield for a given level of risk or alternatively
ensuring minimum level of risk for a given level of return. It can be also taken as risk
and return management. Its aims to determine an appropriate asset mix which attains
optimum level of risk and return.
Deposit mobilization of the bank assets basically means allocation of fund to different
components of banking assets having degrees of risk and varying rates of
returns in such a way that balance conflicting goal of maximum yield and
minimum risk. When the process deposit mobilization of bank assets are done

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various factor such as, availability of fund, liquidity requirement, central banks
policy etc. should be considered. As the task of portfolio management of the bank
assets is to be carried out within the given macro economic environment the manager
should carefully watch related macro economic indicators such as; interest rate,
inflation rate, national income, savings ratio etc.

1.6.2 Review of previous work

There are some studies had been conducted as a thesis for the partial fulfillment of
BBS. Here some thesis is reviewed
Review of journal and Articles
Bajrachaiya (2011), through his article ‘‘Deposit Mobilization in Nepal’’ has
concluded that the mobilization of domestic saving in one of the monetary policy in
Nepal for this purpose commercial banks stood as the vital and active financial
intermediary for generating resources in the form of deposit of the private sector so
for proving credit to the investor in different aspects of economy.
Pradhn(2013), in the article ‘‘Deposit mobilization its problem and prospects’’ has
presented that deposit in the life –blood of every financial institution like commercial
bank , finance company and co-operative or non government organization. He further
adds in joint venture banks, other organization rely heaving on the business deposit
and disbursement.

Review of previous Thesis

There are some studies had been conducted as a thesis for the partial fulfillment of
BBS. Here some thesis is reviewed:-
Tandukar (2010), in the thesis entitled ‘‘Role of HBL in deposit mobilization of
commercial banks’’ has tried to exam role of HBL in deposit collection by the
commercial banks and to analyze the trend of deposit mobilization towards total
investment and loan and advance.
Objective:
 To analyze the trend of deposit mobilization towards total investment and loan
and advance.
Finding:

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  The researcher has found that can be said that all new directives of HBL of
commercial bank are effective and good for both nation and the future of the
banks but the loan classification.

Shrestha(2014), did a research on a topic of ‘‘Dividend policy and its impact on

market price of stock’’ collected the data of four join venture commercial banks
saving five years data from 1998/99 to 2002/03.
Objective:
 To study dividend procedure followed by join venture bank in the correct of
Nepal.
To find out the impact of dividend policy on stock price
Finding:
 Most of the Nepalese banks from the very past have not profit planning and
investment strategy. Which has balance the whole position of the banks it
means consistency even in earning.
 Lack of financial knowledge and the market efficiency has affected the market
price the shade in all banks.
Kuikel.(2015), a study on ‘‘Dividend policy and practices in commercial bank in
Nepal’’ was carried out by the Kush Prasad Kuikelin 2015 taking three newly
established commercial bank covering the five year period 2002/03 to 2006/07.
Objective:
 To examine dividend policy and practices in Nepalese commercial bank.
 To analyze the effect of dividend in market price per share.
Finding:
 There are no sector that the negative relationship between dividend per share
and net profit.
 The earning per share and market per share seemed positively correlated in
sample bank.
1.6.3 Research Gap
Based on the review of the previous researches, researcher found that most of the
previous researches on Ratio deposit mobilization have been conducted showing the
risk and return of the stocks. Ratio analysis of commercial bank’s assets basically

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means the collection of fund to different components but none of the researches are
done on making analysis of portfolio management. Previous researches are not able to
show the real picture of investment pattern of the commercial banks. Thus, this
research aims to conduct the research from the bank’s side regarding the portfolio
investment management available resources of the bank for the maximization of
return to the bank.
 Ratio analysis of commercial bank’s assets basically means the collection of
fund to different components but none of the researches are done on making
analysis of portfolio management.
 Previous researches are not able to show the real picture of investment pattern
of the commercial banks.
 Research on this topics is not conduted in few last year. So, this research fill
up the time gap .

1.7 Research method

The study about the bank, HBL Bank and its deposit collection & distribution has
been done during the field work. More or less, this field work certainly helps to
collect right quantum of accurate data. The sources of data used in this study are
basically secondary in nature & to some extent primary information are also used. All
the necessary data for the project is collected from booklets, Bulletins, Reports,
Financial statement & Annual report of HBL Bank Ltd. In this report, I have used
statistical tools like bar diagram, trend line, percentage change, correlation, regression
to analysis the data.

1.7.1 Research Design

In other words research design is the frame work for a study that helps the analysis of
data related to study topic. “A research design is the arrangement of conditions, for
collecting and analysis of data in a manner that aims to combine relevance to the
research purpose with economy in procedure.”
A research design is the specification of methods and procedures for acquiring the
information needed. It is the overall operational pattern of framework of the project
that stipulates what information to be collected from which sources by what

9
procedures. There are various approaches of research design. For our convenience, in
this thesis, a comparative analysis of financial performance of three joint venture
banks based on descriptive and analytical research design.

1.7.2 Sources of Data

This study mainly based on secondary data. Secondary data are collected from their
respective annual report especially from profit and loss account, balance sheet and
other publications made by the banks. Also some data has been gathered from Nepal
Stock Exchange’s Website. Similarly, articles, journals related to the financial
performance study, previous research report etc., have also taken into account while
collecting information.

Primary Data:
Primary data are those data, which are collected by the researcher, investigators
himself for the first time. The data is thus original in character. These types of data are
obtained in the survey and enquiries conducted by the government, some individuals,
individuals, institutions and research bodies. This report is based on secondary data
only so primary data is not used to complete the report, due to lack of time and fund.
Secondary Data:
Secondary data are those data, which are collected earlier and not collected by the
investigators, researchers himself from various other sources like annual report,
internet, news paper, magazines etc. It is low in cost and time saving but it may not be
fit as per requirement of research. The investigators get them from other sources. This
study is conducted on the basis secondary data only. The data related to the study are
collected from the following sources.
 Annual report of HBL Bank and Various Booklet of HBL Bank.
 From the official Websites of Nepal HBL Bank and www.himalayanbank.com

1.7.3 Analysis of tools

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This thesis work is based financial as well as statistical analysis some major tools and
techniques applied for making the thesis work presentable are briefly considered
below,

 Financial tools

Financial ratios are mathematical expression of financial data to make evaluation

easily from financial statements. These ratios make quantitative analysis between
many financial variables like assets, liabilities, revenues, expenditures etc.

 Ratio Analysis
The relationship between the two accounting figures expressed mathematically is
known as ratio. Ratio analysis is used to compare a firm’s financial performance and
status to that of other firms or to itself on time (Gitman, 1990:275). Likewise, ratio
refers to the numerical or quantitative relationship between two items or variables. In
simple language it is one number expressed in term of another and can be worked out
by dividing the number to the other i.e. it is calculated by dividing one items of the
relationship with the other (Munakarmi, 2002:204). In financial analysis, ratio is used
as an index of yardstick for evaluating the financial position and performance of the
firms. Since, this study mainly moves around investment portfolio of CBs. Only such
ratios which are related to investment of CBs are taken here. Hence, in this study
the following ratios are calculated and analyzed.

1. Total Investment to Total Deposit Ratios

Investment is one of the major credits created to earn income. This implies the
utilization of firms deposit on investment in government securities. This ratio can be
obtained by dividing total investment by total deposit. This can be mentioned as;
Total Investment
Total Deposit
2. Loan and Advances to Total Deposit Ratio
This ratio assesses to what extent the banks are able to utilize the depositor’s
funds to earn profit by providing loan and advances. It is computed by dividing the
total amounts of loans and advances by total deposited funds. The formula used to
computed this ratio is as

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 Loan and Advances
Total Deposit

High ratio is the symptom of higher/ proper utilization of funds and low ratio is the
single of balance remained unutilized/ idle.
3. Cash Balance to Total Deposit:
It is the percentage of cash balance from total deposit. It is the amount kept in the
bank. It is calculated as below:
CashBalance
TotalDeposit

4. Net Profit to Total Assets Ratio

This ratio is very much crucial for measuring the profitability of funds invested in the
banks assets. It measures the return on assets. It is computed by dividing the net
profit after tax by total assets. The formula used for computing this ratio is as
Net profit After Tax
Total Assets

Holding period Return

Holding period return is the return provided by the investment in a period is holding
return. HPR consist capital gain as well as dividend gain. Its calculated,

HPR= Ending Price-Begging Price+ Dividend Receive

Begging Price

Required Rate of Return

The required rate of return is the minimum rate if return that an investor excepts. It is
function of rate of return and risk. The required rate of return is risk premium over the
risk free rate of return. It is determined CAPM . It is calculated

Required Rate of Return (Rj)=Rf+(Rm-Rf)βj

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Where,

Rj= Required rate of return

Rf= Risk free rate of return

Rm= Market rate of return

Βj= beta of the security

Market Risk

Market risk is the risk as a whole for market measured in term of standard deviation
and Variance , variance is the square root of Standard deviation,

Standard Deviation (σ m)=

√ ∑ (x−x )2
n−1

Statistical tools
Standard Deviation

The measurement of the scatterness of the mean of figure in a series about an average
is known as dispersion .The standard deviation measure the absolute dispersion. In
this study ,standard deviation of ratio is calculated,

S.D=
√ ∑ (x−x )2 − ∑ ( x−x)2
n N

Co-efficient of variation
The co-efficient of variation is the relative measurement of dispersion , comparable
across distribution, which is defined as the ratio of the standard deviation to the mean
expressed in percentage. Its calculated
S. D
C.V= × 100
Mean
Coefficient of Correlation Analysis
Correlation is the statistical tools that we can used to describe the degree to which one
variable in linearly related to another. The coefficient of correlation measures the
degree of relationship between two set of data.
Correlation is always between +1 and -1. Its calculated
Correlation (r)=∑xy/√∑x2.∑y2

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1.8 Limitations of the Study

There are some limitations of the study. They are stated as follows:-

 Firstly the relevant data is being taken of HBL Bank Ltd. only ignoring the
same of other same organization.
 This study focuses deposit distribution & collection only ignoring other
functions.
 The data is limited to a period of five years(2018/2023)
 The time allowed for the study limits the study work.
 This based on secondary data only.

1.9 Organization of the Study

The sequential chapters are:

Chapter – One Introduction

The first chapter includes the introduction of the study that consider the background
of the study, historical development of commercial bank in Nepal, statement of the
problem, significance of the study, limitation of the study, literature review, research
method and the organization of the study

Chapter- Two Result and Finding

This is major chapter of the study. It contains the presentation of data and analysis of
the data that specify the findings of the study. This chapter contains the major
findings of the study. It helps the searcher to find out what is going on about the
deposit mobilization in Nepal and selected commercial banks.

Chapter-Three Discussion, Conclusion and Implication

This is the last chapter of the study that contains Discussion, Conclusion of the study
and some implementation to the related banks and total commercial banking system
better then that is.

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 CHAPTER:TWO

FINDINGS AND RESULTS

2.1 Presentation of Data and Analysis

The valuable & crucial tool to evaluate the true & actual position of organization is its
past data. The strength & weakness of the organization can be appraised from the
proper analysis of these data. The analysis of the data has been made easy for
understanding the decision is return attach with the concern table. The interpretation
& analysis have been made along with the presented data.

Bank are highly leveraged institutions depend heavily on attracting spread saving of
general public as deposits as a basis for their asset acquisition, Although there is
considerable interest & invest it on various alternatives. Likewise HBL Bank Ltd. also
has to collect the deposits & invest in different sectors for the fulfillment of the
company's internal & external obligation & for the economic development of the
country. And for this, the most essential factor is together & accept scattered saving of
people as deposit collection of HBL Bank Ltd., corporate office Kohalpur,
Kathmandu from the year 2076 B.S to 2080 B.S have been presented & analyzed.

Deposit Position of HBL Bank

Deposit is those kind of collection in which bank offers interest rate on the deposit of
their account. In deposit, a customer is required to keep some money in a bank for a
period of time generally by those who want to save for a period. This provision is also
applied in HBL Bank. The bank pays higher interest rate for a long term deposit &
lower interest rate for short term. In the time of emergency, customers are allowed to
borrow money for the security of their deposit. Since the bank is aware of the
repayment date, the bank is free to invest. Deposit must carry a minimum maturity of
seven days & can be withdrawn in any time. Deposit position of HBL Bank with

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respect to all deposit can be illustrated by the table belo
Table2.1
Total Deposits of HBL
Table 2.1 is showing the total deposit of HBL from 2017/18 to 2022/23.
Rs in Million
Fiscal Year Current Saving Fixed Call Margin Total
deposit deposit deposit deposit deposit deposit
2017/18 5045 12852 6107 222 586 24814
2018/19 5028 14582 6350 41 488 26490
2019/20 5589 15784 8201 97 375 30048
2020/21 4784 17972 6423 2017 645 31842
2021/22 3218 20061 6377 4359 665 34681
2022/23 3694 16294 13507 6505 1219 40920

( Source: Annual Report of Himalayan Bank Ltd.)

Table 2.1 show the total deposit of te bank from the FY 2017/18 to FY 2022/23.
Total deposit seems to be highest at FY 2022/23 . It seems to be Increasing order , so
it is increase from the FY 2017/18 to FY 2022/23.

Figure 2.1 Deposit Position

200000
180000
160000
140000 2017/18
120000 2018/19
100000 2019/20
80000 2020/
21
60000 2021/
22
2022/2
40000 3
20000
0

Figure2.1 show the deposit position of the bank from FY 2017/18 to FY 2022/23.
From the beginning total deposit is increased but in percentage sometime it is

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increasing and sometime decreasing.
Annual Increase Rate of Total Deposit
Table 2.2 is presenting the Annual Increase Rate of Total Deposit over differente
time period .
Table No.2.2
Annual Increase Rate of Total Deposit
Rs in Million
Fiscal year Total Deposit Change in Deposit
2017/18 24814 -
2018/19 26490 1676
2019/20 30048 3558
2020/21 31842 1794
2021/22 34681 2839
2022/23 40920 6239

( Source: Annual Report of Himalayan Bank Ltd.)

Table 2.2 show the annual increase rate of deposit of HBL over the FY 2017/18 to FY
2022/23. Highest chane occure in FY 2022/23 . It is 1676 in FY2018/19, 3558 in FY
2019/20, 1794 in FY 2020/21 , 2839 in FY 2021/22 and 6239 In FY 2022/23.
Figure 2.2
Total Deposit
45000
40000
35000 2017/1
8
30000
2018/
25000 19
2019/2
0
20000 2020/2
1
2021/2
15000 2
2022/
10000 23
5000
0
TOTAL DEPOSITE CHANGE IN
DEPOSITE

Above dia-gram indicates the amount of total deposit of Himalayan Bank Ltd.
The above table shows the annual increase rate of total deposit. This has been
increasing in previous 6 years. It is due to high increment of total deposit then the
change in deposit.

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Position of Total Deposit Mobilization
Table 2.3 show the Position of Total Deposit Mobilization of HBL .
Table 2.3
Deposit Mobilization
Rs in Million
Fiscal Year Total Deposit Loan and Advance
2017/18 24814 13451
2018/19 26490 15761
2019/20 30048 17793
2020/21 31842 20179
2021/22 34681 25519
2022/23 40920 31567

Source: Annual report of Himalayan Bank Ltd.

Table 2.2 show the total deposit mobilization of the bank . Deposit trand is increasing
over the sample period. So, this is increasing from the FY 2017/18 to Fy 2022/23.
.
Figure 2.3
Total Deposit and Loan & Advance
Total Deposit and Investment Position
Table 2.4 is present the Total Deposit and Investment Position of HBL.
Table 2.4
Total Deposit and Investment Position
Rs in Million
Fiscal Year Total Deposit Investment
2017/18 24814 11692
2018/19 26490 10889
2019/20 30048 11822
2020/21 31842 13340
2021/22 34681 8710
2022/23 40920 8770

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 Source: Annual report of Himalayan Bank Ltd.
The above Table shows the position of total investment and total deposit of the
previous five years. Total deposit has been increasing in each year but the investment
increased except in the year 2018/19 and 2022/23. The total investment was Rs 11692
million in 2017/18 which has decreased and reached to Rs 10889 million in the year
2018/19 while the investment was Rs 11822 million in 2019/20 which increase and
reached to Rs 13340 million in 2020/21 which has decreased to Rs. 8710 million in
the year 2021/22 and then again increased to Rs.8770 million in the last year 2022/23.

Figure 2.4
Total Deposit and Investment
200000
180000 2017/1
82018/1
160000
9
2019/2
140000 0
2020/
120000 21
2021/2
100000 2
202/2
80000 3

60000
40000
20000
0
TOTAL DEPOSITE INVESTMENT

The above figure shows the position of total investment and total deposit of the
previous five years. Total deposit has been increasing in each year but the investment
increased except in the year 2018/19 and 2022/23. The total investment was Rs 11692
million in 2017/18 which has decreased and reached to Rs 10889 million in the year
2018/19 while the investment was Rs 11822 million in 2019/20 which increase and
reached to Rs 13340 million in 2020/21 which has decreased to Rs. 8710 million in
the year 2021/22 and then again increased to Rs.8770 million in the last year 2022/23.

Analysis of Data
I have done financial as well as statistical analysis.
Financial Analysis

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Under financial analysis following calculations were made.
2.5.1Total Deposit to Investment Ratio:
It is the percentage of the investment made by the bank from the amount raised from
the total deposit. It is calculated as below:
Investment
*100%
TotalDeposit
Table 2.5 Total Deposit to Investment Ratio
Rs in Million
Fiscal Year Investment Total Deposit % of Investment on Total Deposit
2017/18 11692 24814 47.12
2018/19 10889 26490 41.11
2019/20 11822 30048 39.34
2020/21 13340 31842 41.89
2021/22 8710 34681 25.11
2022/23 8770 40920 21.43

Source: Annual report of Himalayan Bank Ltd.

The above table shows the ratio of investment and total deposit. This ratio has been
decreasing in first three years and has increased in fiscal year 2020/21. In final year
the investment percentage decreases from 41.89% to 21.43%. The total deposit is
increasing in every year but the investment is increasing and decreasing from the year
2017/18 to2022/23, so the ratio is fluctuating.
Figure 2.5
Total Deposit to Investment Ratio

20
 45000
40000 2017/1
8
2018/1
35000 9
2019/2
30000 0
2020/2
1
25000 2021/2
2
20000 2022/2
3
15000
10000
5000
0
Investment Total deposit

Source: Annual report of Himalayan Bank Ltd.

The above Figure shows the ratio of investment and total deposit. This ratio has been
decreasing in first three years and has increased in fiscal year 2020/21. In final year
the investment percentage decreases from 41.89% to 21.43%. The total deposit is
increasing in every year but the investment is increasing and decreasing from the year
2017/18 to2022/23, so the ratio is fluctuating.

Loan &Advance to Total Deposit Ratio

It shows the percentage of loan & advance in total deposit. It is calculated as below
LoanandAdvance
= ∗100 %
TotalDeposit
Table 2.6
Loan &Advance to Total Deposit Ratio
Rs in Million
Fiscal Year Loan & Advance Total Deposit Ratio (%)
2017/18 13451 24814 57.21
2018/19 15761 26490 59.50
2019/20 17793 30048 59.21
2020/21 20179 31842 63.37
2021/22 25519 34681 73.58
2022/23 31567 40920 77.14

Source: Annual report of Himalayan Bank Ltd.

21
The above table shows the ratio of loan & advance to total deposit. This ratio has been
increasing in the previous five years. It is due to the high increment of loan & advance
than the total deposit. It was 57.21% in the year 2017/18 which has increased year by
year and reached to 77.14% in final year 2022/23.

Figure 2.6
Loan &Advance to Total Deposit Ratio
45000
2017/18
40000
2018/19
35000
2019/20

30000
2020/21
25000
2021/2
2
20000
2022/2
3
15000

10000

5000

0
Loan and advance Total deposit

The above Figure shows the ratio of loan & advance to total deposit. This ratio has
been increasing in the previous five years. It is due to the high increment of loan &
advance than the total deposit. It was 57.21% in the year 2017/18 which has increased
year by year and reached to 77.14% in final year 2022/23.
Cash Balance to Total Deposit:
It is the percentage of cash balance from total deposit. It is the amount kept in the
bank. It is calculated as below:
CashBalance
¿ *100
TotalDeposit

22
 Table 2.7 Cash Balance of Total Deposit

Rs. in million
Fiscal Year Cash balance Total Deposit Ratio (%)

2017/18 286 24814 1.15

2018/19 305 26490 1.15
2019/20 177 30048 0.59
2020/21 278 31842 0.87
2021/22 473 34681 1.36
2022/23 632 40920 1.54
Source: Annual report of Himalayan Bank Ltd.
The above table shows the percentage of cash balance on total deposit. It is the
amount the bank keeps for the liquidity need or other needs. It is calculated as shown
above. This ratio has been fluctuating in the previous five years. It was 1.15% in
2017/18 and remains constant in 2018/19 which decreased to 0.59% and 0.87% in
next two years ,and then increased to 1.36% in year2014/15.Lastly it increased to
1.54% in 2022/23.
Figure 2.7
Cash Balance of Total Deposit
200000
2017/1
180000 v 8
2018/19
160000
2019/20
140000
2020/2
120000 1
2021/2
100000 2
2022/23
80000

60000

40000

20000

0
Cash balance Total deposit

Source: Annual report of Himalayan Bank Ltd.

The Figure shows the percentage of cash balance on total deposit. It is the amount the

23
bank keeps for the liquidity need or other needs. It is calculated as shown above. This
ratio has been fluctuating in the previous five years. It was 1.15% in 2017/18 and
remains constant in 2018/19 which decreased to 0.59% and 0.87% in next two
years ,and then increased to 1.36% in year2014/15.Lastly it increased to 1.54% in
2022/23.

Statistical Analysis
Under statistical analysis I have done calculation of the Karl Pearson’s correlation
coefficient between Investment and Total Deposit.

Karl Pearson’s Correlation Coefficient Calculation Table

Table 2.8.1
Correlation Coefficient between investment and total deposit
Name r r r2

HBL -0.134 0.017956

Source: Appendix1
From the computation of coefficient of correlation between Investment and
Total deposits r= -0.314 which shows negative correlation between the
Investment and Total Deposit.
Correlation Coefficient between total deposit and loan & advance
Correlation Coefficient between total deposit and loan & advance
Name r r2

HBL 0.0083 0.000069

Source: Appendix2
From the computation of coefficient of correlation between total deposit and
loan & advance r= 0.0083 which shows positive correlation between the total
deposit and loan & advance.
2.8.3 Correlation Coefficient between total deposit and cash balance

24
 Correlation Coefficient between total deposit and cash balance
Name r r2

HBL 0.01026 0.000105

Source: Appendix3
From the computation of coefficient of correlation between total deposit and
cash balance r= -0.314 which shows positive correlation between the total
deposit and cash balance.

2.2 Major finding of this study

 Total deposit of sample bank is fluctuating from the beginning total deposit.
Deposit is increased but in percentage sometimes it is increasing and some
time decreasing.
 Total deposit of sample bank has been increasing in each year. The highest
total deposit is 40920 and lowest total deposit is 24814.
 Total deposit mobilization has been increasing the highest total loan and
advance is 31567 and lowest loan and advance is 13451.
 Total deposit has been increasing in each year but the investment increase
except in the year 2018/19 and 2022/23.
 The ratio of investment and total deposit are fluctuating. The ratio of
investment decreasing in1st three year and has been increased in fiscal year
2020/21 I fiscal year the investment percentage decrease from 41.83 to 21.43.
And the total deposit is increasing in every year.
 Loan and advance to total deposit ratio has been flucted trend. The ratio
shows highest and lowest ratio as 77.14 and 57.21.
 Cash balance of total deposit ratio are fluctuating. The ratio shows highest and
lowest ratio as 1.54 and 0.59.
 The correlation coefficient between total deposit and loan & advance of HBL
shows the positive relationship between two variables. (Since r2=0.000069)
 The correlation coefficient between total deposit and cash balance of HBL

25
 shows the positive relationship between two variables.(since r2=0.000105)

CHAPTER:THREE
DISCUSSION, CONCLUSION AND IMPLICATION

3.1 DISCUSSION
In modern days, the role of commercial bank is very significant as it helps to boost the
trade & commerce of the country. In the context of Nepal, commercial banks are
playing vital role in developing economic growth for the country. All the economic
conditions are based on financial institution & the banks in different activities in the
country. Being the major financial institution of the country, the role of commercial
banking in the economy is obviously a prime reusable in the formulation of banking
policy.

This report tries to confide HBL Bank’s remarkable performance in collecting

deposits from the various sources & contributing for the economic development of the
country. HBL Bank Limited was able to collect maximum amount in the recent fiscal
year 2015/16. The outstanding total deposit was Rs. 34681 millions at that time.
Though the country is in transitional period after announcing the country Nepal as
democratic country, there is political instability, strikes & economic depression, the
deposit position of HBL Bank Limited is in increasing trend. HBL Bank Limited
collect more deposit in fiscal year 2015/16 than other past years. But it is facing

26
problem to mobilize the money in the productive & fruitful activities of the nation due
to unstable government of Nepal, poor security condition, policy of government and
other factors.

3.2 Conclusion
Nepal has realized that the desire growth rate of the country can be achieved only
when the idle money of people can be attracted to be woven as a single whole and
mobilized in the productive and fruitful activities of the nation. Deposit helps the bank
to earn profit.
HBLBank is playing this intermediary function of resources collection & utilization
thus carrying the economic health of the country. This report shows that HBL Bank
has been efficiently collecting the deposit through its branches around country. The
deposit position of HBL has fluctuated during the observed period. The bank in its
first year of operation under the Nepalese management team has proved capable of
running professionally & efficiently as evidenced by HBL Bank exceptionally high
growth rate in profit, deposit & lending as compared to national average.

3.3 IMPLICATION
HBL has been operating well from its establishment. But presently it is facing leading
competition due to the increased number of Banks. So it is obvious that it is facing
various problems regarding the financial performances. This study attempts to
evaluate the liquidity flow in concern with the financial performance of the bank.
Even though the capital fund of bank is increasing it could not increase its investment
in the same rate. Moreover investment is also increasing in compare to previous year,
which is one of the important & successful parts of HBL Bank.

On the basis of the analysis made above and other observations, the following
recommendations are made:
 HBL Banks hold give continuity to its growth trend of deposits.
 HBL Banks hold attract more depositors by providing quality & prompt
services to its customer.

27
  HBL Banks hold extend its credits in the genuine project & utilize its resources
fully and efficiently.
 HBL should expand availability of banking services branch expansion policy
should be continued. Branch expansion also in rural areas should not be
neglected.
 Bank should provide more attention towards the priority sector and industrial
scheme to contribute to the national economic development.
 The bank should carry out the research and development activities for the
market promotion further.
 Training & promotional activities along with other motivational incentives
should be provided to the staffs to compete with other competitors commercial
banks.

REFERENCE
Annual report of Himalayan Bank Limited 2074/075.

English Nepali Dictionary.

Fudenberg, D. and D. Levine (2005). "A Dual Self Model of Impulse Control."

working paper.

Gugerty, M. K. (2001). You Can't Save Alone: Testing Theories of Rotating Savings

and Credit Organizations. Boston, Harvard University.

Kothari, R. C. (1985). Research Methodology. Methods and Techniques. New Delhi:

Wiley Eastern Limited.

Oxford Dictionary

Pradhan, S. B. (1996). Deposit mobilization & its problem and prospects. -, 4(1), 9-10

Ramakrishna, P. (2012). The long run relationship between savings and investment in

ethiopia. Karnataka: An Unpublished Master Thesis.

28
Smith, K. (1993). Investment monitoring systems, abandonment of capital assets, and

firm performance. Journal of Management Accounting and Research , 5 (2), 281-

299.

2393 - 9125, SSRG International Journal of Economics and Management Studies

(SSRG-IJEMS) – volume4 issue4 April 2017 ( www.internationaljournalssrg.org

Website
www.google.com
www.himalayanbank.org.com
www.himalayanbank.com

Appendix1

Correlation Coefficient between investment and total deposit

Rs in million
Investment (X) Total Deposit (Y) x=X-11822 y=Y-30048
11692 24814 130 -5235
10889 26490 -933 -3558
11822 30048 0 0
13340 31842 1518 1794
8710 34681 -3112 4633
8770 40920 -3052 10872

ΣY 6¿
ΣX =147875¿ ¿
Here X = n
=65223
=10870.5; Y = n ¿ = 24646
Σ xy
Now, r= √ Σx 2 √ Σy 2
-9055540
= √12876257 √64747714
29
 -9055540
= 28873981 .23 = -0.314
Hence the coefficient of correlation r = -0.314

30
 Appendix2

Correlation Coefficient between Total deposit And Loan and advance

Rs in million
Total deposit(x) Loan and advance(y) X=x-31466 Y=y-20712
24814 13451 -6652 -7261
26490 15761 -4976 -4951
30048 17793 -1418 -2919
31842 20179 376 -533
34681 25519 3215 4807
40920 31567 9454 10855

ΣX
=188795 ΣY 6¿
n =124270¿ ¿
Here X = =31466 ; Y = n ¿ = 20712
Σ xy
Now, r= √ Σx 2 √ Σy 2
194952757
= √(188795)2 √(124270)2
= 0.0083
Hence the coefficient of correlation r = 0.0083

31
 Appendix3

Correlation Coefficient between Total deposit and Cash balance

Rs in
million
Total deposit(x) Cash balance(y) X=x-31466 Y=y-359
24814 286 -6652 -109
26490 305 -4976 -54
30048 177 -1418 -182
31842 278 376 -81
34681 473 3215 114
40920 632 9454 273

ΣX
=188795 ΣY 6¿
n =2151¿ ¿
Here X = =31466 ; Y = n ¿ = 359
Σ xy
√
Now, r= Σx
2
√ Σy 2
4168844
= √(188795)2 √(2151)2
= 0.01026
Hence the coefficient of correlation r = 0.01026

32